|
Deduction Of General And Special
Benefits
By M. Robert Goldstein & Michael J. Goldstein
In the forty to fifty years that the two of us have been
practicing in the area of condemnation law, we have learned
that there are no easy cases. There are, of course, as with
any area of law, some that are more difficult than others.
Generally speaking, partial takings present more problems
than total takings. The obvious reason is that all you have
to deal with in a total appropriation is the value of the
property taken, complicated, of course, by a myriad of legal
guidelines. When there is a partial acquisition, however,
we first deal with the value of the property as a whole, then
with the value of the part taken and finally with the value
of the part not acquired, both before and after the acquisition,
i.e., consequential damages. Within the area of consequential
damages, we must explore, not only the loss in value suffered
by the remaining property, but the possible benefits to that
remainder which are the result of the improvement for which
the part taken was acquired. To further complicate things,
the question arises, do we consider special benefits to the
remainder as distinguished from general benefits. In this
area, New York finds itself holding a minority view.
First, let us define what is meant by general benefits and
special benefits. At least for the purposes of this discussion,
general benefits are "... those benefits which result
from the fulfillment of the public project which necessitated
the taking and are common to all lands in the vicinity of
the condemnee's property. They are those benefits which
accrue to the owners of property within the usable range of
the public work." (Nichols on Eminent Domain, Third
Ed., §8A.04[2] p. 38) Special benefits are those
that "... arise from the peculiar relation of the land
in question to the public improvement." (Nichols
on Eminent Domain, Third Ed., §8A.04[2] p. 39)
General benefits are not hard to figure out. Virtually all
public improvements are supposed to have them or, at least
in theory, there would be no public use which would justify
the condemnation. A public school is a clear example. To the
extent that residential values are enhanced because a school
has been built in the district it serves, there is a general
benefit to the properties sharing that enhanced value. Very
often, a house will sell for more because it is near a school.
It, however, shares that benefit with other houses that are
near the school.
Special benefits are somewhat more difficult. Courts, in
fact, have had difficulty in many cases in separating them
from general benefits. One Court called the distinction, "shadowy
at best." (State Hwy. Comm'n v. Koziatek,
639 S.W.2d 86 (Mo. Ct. App. 1982)). Many states and many courts
within states cannot agree on whether a particular benefit
is special or general. However, we believe that the difficulties
are overstated. Frankly, we suspect that some courts have
difficulty because they are trying to justify calling general
benefits, special. The reasons will be explained below. Reduced
to simple terms, which it should be, if the benefit is shared
by a group of properties, it is general. If it is peculiar,
by its nature, to one property, it is special. An example
of this is a taking for a new road. The road benefits all
of the property in its area and to the extent that it provides
access to those properties and the properties served by that
road are thereby enhanced in value, there is a general benefit.
If that road is built through a property and two new frontages
are created on that property and the property is the type
that benefits from having additional frontage (eg., commercial),
that benefit is special to that property. In the first instance,
the public, or a segment of it, shares in the benefit and
it is general. In the second instance, only the one property
benefits and it is special to that property.
The federal and state courts are divided as to what effect,
if any, special and/or general benefits have on partial takings.
In Chiesa v. State of New York, 36 N.Y.2d 21,
364 N.Y.S.2d 848, the key modern case on this subject in New
York, the Court of Appeals cited 2 Lewis, Eminent Domain
(3rd ed.), §687, p. 1177 et. seq., a well
regarded treatise, no longer printed or updated, in its listing
of the five classes of applications: "... first, benefits
cannot be considered at all; second, special benefits may
be set off against damages to the remaining part, but not
against the value of the part taken; third, benefits, both
special and general, may be set off against damages to the
remaining part, but not against the value of the part taken;
fourth, special benefits may be set off against both damages
to the remaining part and the
value of the part taken; and fifth, both general and special
benefits may be set off against both damages to the remaining
part and the value of the part taken."
The majority of states have taken the second of Lewis'
positions. Most states will consider only special benefits
and only as an offset against consequential damages to the
remaining property. The federal courts have adopted Lewis'
fourth position. They also only consider special benefits,
not general, but they not only set them off against consequential
damages but, if the remainder is enhanced in value to the
extent that it enjoys now, a greater value than it did before,
the balance is set off against the value of the part taken.
As we stated above, New York has adopted the position held
by a minority of the states. It has adopted Lewis' third
position. New York has not distinguished general from special
benefits but it only sets them off against consequential damages,
not against the value of the property taken.
At one time, before 1907, New York, or so it seemed, set
off all benefits against consequential damages and the value
of the property taken. The United States Supreme Court, in
1897, in Bauman v. Ross, 167 U.S. 548, 17 S.Ct.
966, cited those early New York decisions and said, "The
just compensation required by the Constitution to be made
to the owner is (at least) to be measured by the loss caused
to him by the appropriation. He is entitled to receive the
value of what he has been deprived of, and no more ... when
part only of a parcel of land is taken for a highway, the
value of that part is not the sole measure of the compensation
or damages to be paid to the owner, but the incidental injury
or benefit to the part not taken is also to be included."
In 1907, in Matter of City of New York (Consolidated
Gas Co.), 190 N.Y. 350, the New York State Court of
Appeals specifically rejected the rule in Bauman v.
Ross, (supra). They pointed out that the earlier New
York cases involved takings where the statute provided for
an assessment against properties partially taken and wholly
untaken, for the cost of the public project on the basis that
they were benefitted by that project. (In Bauman v.
Ross, supra, although not determinative of the case,
there was also an assessment for benefit). The New York Court
of Appeals, in Matter of City of New York (Cons. Gas
Co.), supra, distinguished the earlier New York cases
on the ground that they were concerned with statutes which
authorized the concurrent exercise of the powers of eminent
domain and taxation. As the case under review did not have
a special assessment statute which would assess all benefitted
properties regardless of whether there was a partial taking,
the Court of Appeals held, in that circumstance, "that
in no case should an award be made for less than the value
of the property actually taken by condemnation."
The Court based its decision on two reasons. First, there
was no assurance that the use which conferred the benefit
would be continued and, second, the municipality could not
select, arbitrarily, only the owner whose property was partially
taken to bear even a part of the cost of the public improvement
while, exempting all of the other neighboring properties from
bearing the cost when they benefitted to an even greater extent
because they did not lose a part of their property.
In 1970, the State of New York appropriated 22 acres of land
out of 193 owned by Catherine Chiesa in order to build a new
interchange on the New York State Thruway. The appraisers
for both sides agreed that the fact that the remainder of
the property was near the new interchange enhanced its value.
The Court of Claims made an award for the value of the property
taken but made no award for severance because the enhancement
offset whatever factors might have caused a consequential
damage.
In a move that, to us, constitutes official chutzpah, the
State appealed and argued that the enhancement should be set
off against the award for the property taken to the extent
that no award should have been made. In other words, they
wanted to take 22 acres of land from an owner, against her
will, not pay for it, and have the Court sanction it. The
Court of Appeals, in Chiesa v. State of New York, supra,
said:
"Applying the holding enunciated above to the case
at bar, we recognize that it is unlikely that the New York
State Thruway will be relocated in the near future; and,
therefore, it is improbable that an owner whose property
is partially taken will be unable to realize the benefit
accruing to his remaining property by its proximity to the
public improvement. However, we are also mindful of the
fact that claimant's adjoining and neighboring property
owners have likewise been benefitted by the public improvement
without having been compelled to contribute any of their
property and without having been specially assessed for
the public improvement. Thus, offsetting the general and
special benefits to the claimant's remainder against
the value of the 22 acres actually taken from her would
be, in effect, an arbitrary and discriminatory exercise
of the State's power of taxation such as was specifically
proscribed in Matter of City of New York (Cons. Gas
Co.), 190 N.Y. 350, 83 N.E. 299, Supra."
".... Since the State has acquired 22 acres which
it did not formerly own, it seems to us that the State,
and indirectly the public at large, should bear the burden
of paying for the land taken for the public improvement
... Moreover, we are skeptical of a rule of law that would
enable the appropriating authority to simply urge that the
public improvement will benefit an individual's remaining
property to such an extent that no compensation need be
made for the property actually taken. Finally, ... the rule
of law established in Matter of City of New York (Cons.
Gas Co.) (supra) fosters a more equitable result
in instances in which the anticipated benefits to the remainder
eventually prove to be illusory because it distributes the
cost of the land actually taken upon the State's entire
population."
We believe the Chiesa decision leaves one question
unanswered. If it is unfair, and if it is "an arbitrary
and discriminatory exercise of the State's power of taxation"
to, in effect, tax only a property owner whose property is
taken by deducting the benefit to his/her remainder property
from the value of the property taken, why is it fair and not
an arbitrary and discriminatory exercise of the power of taxation
to, in effect, tax only that same property owner by consequentially
damaging his remainder property and not paying him for it
because he benefitted, to the same extent, if not less, than
his/her neighbors whose property was not partially taken?
That, we believe, is what happened when the State of New York
joined the minority of States that deduct general benefits
from consequential damages.
|
